CRAB CAY MASTER PLANNED COMMUNITY Located At CRAB CAY, QUEEN ELIZABETH HARBOR, GREAT EXUMA, THE BAHAMAS FOR: Mr. Leon Andrew Wells CN Luxury Resorts, Inc. 3033 West Alabama Houston, TX 77098 BY: 2200 North Loop West, Suite 230 Houston, Texas 77018 Effective Date of Appraisal October 25, 2018 Mr. Leon Andrew Wells CN Luxury Resorts, Inc. 3033 West Alabama Houston, TX 77098 Re: Master Planned Resort and Residential Development Crab Cay Master Planned Community Crab Cay, Queen Elizabeth Harbor, Great Exuma, The Bahamas Dear Mr. Leon Andrew Wells: In fulfillment of our agreement as outlined in the Letter of Engagement, we are pleased to transmit our appraisal report on the property referenced above. The value opinion reported below is qualified by certain assumptions, limiting conditions, certifications, and definitions, which are set forth in the report. We particularly call your attention to the extraordinary assumptions and hypothetical conditions in this report. Throughout the Caribbean and Bahamas in 2018, through September, significant increases in hotel occupancies and rental rates, bulk parcel demand from developers pushing pricing to upwards of $2,500,000 per acre, and more hotel sales (22 sales through July 2018) with just nine sales totaling over $4,300,000,000 in transactions, more transactional revenue than the previous three years combined have been evidenced that show The Bahamas, Caribbean and Dominican Republic markets have recovered from the economic recession that began in 2007. Hurricane Irma in 2017 stalled 28 hotel projects (this number does not include Puerto Rico damaged hotels) from operating causing over 2,000,000 hotel room nights being unable to be occupied. Consequently, operational hotels have been pushed to all-time occupancy and rental rate highs. Projects in the Bahamas have tended to fair better during the recovery than those resorts in other areas of the Caribbean. This is due to the perceived security of investing in real estate, beauty of the landscape, superior airport access and close proximity to the United States As such, lot and home prices in the Bahamas remain at some of the highest levels of any resort country in the world. Surveys of brokers, title companies, hotel management companies, construction companies and prior investors who had invested in excess of $8,000,000,000 in the Caribbean have unilaterally indicated the market in the Bahamas has recovered to economic levels that are supportive of new construction, as seen in the sales of two condominiums at $1,647 per square foot in the newly constructed condominium building at February Point, Great Exuma. Decreased unemployment, favorable taxes, perceived security from high wealth individuals relative to safety and financial aspects, as well as high consumer sentiment on government performance has perpetuated real estate market conditions in the Bahamas to rebound to above normalized conditions. Crab Cay Master Planned Community will cater to an upscale market, similar to other resort and residential projects on Exuma, New Providence, Abaco and other islands in the Bahamas. This marina and resort community is unique to the market due to: 1. Its island configuration; 2. Protected “Hurricane Hole” in Queen Elizabeth Harbor; 3. Location proximate to Sandals Resort; and 4. Location proximate to Exuma International Airport. The spectacular views are expected to command upper pricing. Further, the hotel, marina and club development will allow the community to compete with the highest priced resort and residential developments in the region. The following is a summary of the land use: Note: 64,500 SF adjusted to 2/3 size The property was inspected by and the report was prepared by Ryan P. Lin, MAI. Ryan P. Lin, MAI gathered and analyzed considerable data and information having a bearing on its values. Our experience with numerous land buyers, sellers and developers’ of resort-oriented residential projects in the Exumas, the Bahamas and other Caribbean countries (Dominican Republic, Barbuda, USVI, BVI, Anguilla, etc.), in addition to 32 cities in Mexico and Central America, provides the appraiser with unique market knowledge and information that few real estate professionals possess. Most of the sale comparables have been analyzed/appraised by the appraiser in previous assignments and associations with local and national politicians, attorneys and title companies provided input that has led to a reasonable opinion of market value. The appraiser owns not only the largest enriched database in the United States with 151,000,000 properties, but also tracks hundreds of Caribbean projects for over 20 years. Over 150 data specialists costing millions annually, process the data and upgrades, are part of his team. High-value real estate and resort properties located outside of the United States are generally marketed, priced, and transacted in United States Dollars (USD). Therefore, the data presented, analysis, and conclusions are reported in United States Dollars. There is also the assumption that the developer has the financial capabilities to fund the infrastructure through debt and/or equity. The following is a summary of the proposed land uses and build-out: The scope of this assignment included providing a market value “as-is”, “upon completion of construction (roadways, infrastructure, landscaping)” estimate provides for the sale of finished lots, resort parcel superpads, etc. The following is a summary of the lot inventory to be sold: The master developer will not be developing all homes and condominiums and there is substantial demand from sub-developers to sell Bulk Parcels for development; a summary of that inventory follows: The master developer will be developing a few homes and condominiums and that inventory follows: The master developer will also be constructing the hotels, restaurants and destination spa. A summary follows: Lastly, the master developer will be constructing the marina. A summary follows: The restaurants and destination spa were not appraised as a stand-alone asset, but the costs associated with construction was included with the resulting resale value being the same as cost. It is assumed the cost-value relationship would be a ‘break-even’ for these going concern operations, as they benefit all guests and owners within the Crab Cay Master Planned Community. Because no master planned community project ever completes 100 percent infrastructure prior to initiating sales, the prospective date reflects the data where infrastructure is in sufficient capacity to start sales. Based on the Scope of Work, and as outlined in the report, we have developed an opinion that the Market Value of the Fee Simple estate of the above property, subject to the assumptions and limiting conditions, certifications, extraordinary and hypothetical conditions, if any, and definitions, is: This letter is invalid as an opinion of value if detached from the report, which contains the text, exhibits, and Addenda. Respectfully submitted, SAGE GROUP Ryan P. Lin, MAI Managing Director Certified General Real Estate Appraiser [email protected] 346-571-7074 Office Direct TABLE OF CONTENTS TABLE OF CONTENTS ----------------------------------------------------------------------------------------------------------------------------- 1 EXECUTIVE SUMMARY ---------------------------------------------------------------------------------------------------------------------------- 2 PROJECT SUMMARY ------------------------------------------------------------------------------------------------------------------------------- 3 INTRODUCTION ------------------------------------------------------------------------------------------------------------------------------------- 11 LODGING MARKET SUPPLY AND DEMAND ANALYSIS ------------------------------------------------------------------------------ 25 COMPETITIVE MARKET OVERVIEW --------------------------------------------------------------------------------------------------------- 29 COMPETITVE MASTER PLANNED COMMUNITY DEVELOPMENTS -------------------------------------------------------------- 37 LAND SALES AND HOME PRICES ----------------------------------------------------------------------------------------------------------- 47 FUNDAMENTAL MARKET ANALYSIS ------------------------------------------------------------------------------------------------------- 51 SITE CHARACTERISTICS ----------------------------------------------------------------------------------------------------------------------- 59 PROPOSED HOTEL - GENERAL DESCRIPTION ----------------------------------------------------------------------------------------- 62 HIGHEST AND BEST USE ----------------------------------------------------------------------------------------------------------------------- 63 VALUATION PROCESS --------------------------------------------------------------------------------------------------------------------------- 66 COST APPROACH --------------------------------------------------------------------------------------------------------------------------------- 68 LAND VALUATION --------------------------------------------------------------------------------------------------------------------------------- 75 ESTATE LOT ANALYSIS ------------------------------------------------------------------------------------------------------------------------- 83 FINISHED HOME INVENTORY ----------------------------------------------------------------------------------------------------------------- 89 MARINA ANALYSIS --------------------------------------------------------------------------------------------------------------------------------